I: Introduction

Peter Sellers, one of my favourite comic actors, starred in a slight but amusing film called Heavens Above! [1963] in which he played a Church of England prison chaplain who is mistakenly appointed to a living in a well-heeled area. He has all sorts of notions of social justice and fairness and attempts to put them into effect with disastrous results for all concerned, including the targets of his charitable but misguided efforts. His free-food scheme, for example, is both unsustainable and, at the same time, threatens to put the local grocer out of business. The point of the film is that utopian schemes, no matter how well intentioned, sit ill with real people in the real world. The film serves as an amusing example of the folly of thinking that good intentions and being nice can, by an act of will, overturn the technical economic necessities that must underlie any functioning economy.

My original title for this paper was ‘Economics and Ethics: Friends or Foes?’–a strange title, one might be forgiven for thinking. Could one envisage someone delivering a paper entitled: ‘Ethics and Physics: Friends or Foes?’. This scarcely seems likely, yet the title of this paper would, I believe, not be considered obviously odd in the way that a paper on the relation of Ethics to Physics would surely be. Why is that? Because, I believe, we intuitively think that Ethics and Economics could have something to do with each other; that their relative fields of enquiry, their topics; their judgements, etc. could in principle at least, overlap. Whether or not they in fact do engage (and if so, how) is, of course, another question.

Reviewing Leland B. Yeager’s Ethics as Social Science: The Moral Philosophy of Social Cooperation, Roderick T. Long attributes to Yeager the view that ‘…economists and moral philosophers often like to pretend they have nothing to do with each other. Economists pose as value-neutral scientists who have no need for airy-fairy moral theory; yet they regularly dispense the sorts of prescription and advice that cry out for ethical analysis. Philosophers likewise view themselves as having loftier concerns than vulgar economics; but by conducting their ethical and political theorizing in ignorance of economic principles, they are unable to avoid recommending policies that would be unworkable or disastrous in practice’1.

II: Economics and Ethics

Generally, if we want to know whether and to what extent A and B have something to do with each other, we need to be able to delineate A and B clearly. And this is where our problem starts.

Alfred Marshall thinks of economics as a study of mankind in the ordinary business of life; while Lionel Robbins, in his classic An Essay on the Nature and Significance of Economic Science conceives of economics as a science that studies human behaviour as a relationship between ends and scarce means that have alternative uses. The Encyclopaedia Britannica, while boldly proferring the definition that economics is a social science that seeks to analyse and describe the production, distribution, and consumption of wealth simultaneously concedes that no one has ever succeeded in neatly defining the scope of economics! Surely we can find a definition in a dictionary of economics but no–having reviewed and dismissed one or two would-be definitions, and proferred, half-heartedly, one of their own, the authors concede that ‘It may well be that a wholly acceptable definition does not exist.’! [The Penguin Dictionary of Economics: ‘Economics’.] One cynical commentator noted that an economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today while another went so far as to ask, ‘who put the ‘con’ in economics?’.

It is not so much difficult to define ethics as it is to choose which of the three dominant paradigms to endorse- -consequentialism, deontologism, or virtue ethics. Whatever the precise definition of economics, and whichever ethical system one chooses, the key point on which economics and ethics are supposed to differ is that economics is taken to be descriptive and ethics is taken to be prescriptive; one tells us the way things are; the other, the way things ought to be.

Schematically, we could envisage 5 possible relational possibilities for Ethics and Politics:

They are entirely disconnected

They are precisely co-terminous

Ethics is included within Economics as a proper subset

Economics is included within Ethics as a proper subset

They partially overlap

Why it is that our intuition on the possible relation of, respectively, physics and economics to ethics differs? At least part of the reason why we would have difficulty understanding why someone would offer a paper on the relationship of physics and ethics is that we understand physics to be a science, with its own subject matter, its own methods of enquiry , and its own results. Where does ethics fits into all this? Of course, physicists are human beings and human beings, even physicists, can act unethically (or even ethically) but physics, just as such, doesn’t appear to come with the range or scope of ethics. Prescinding from disputed issues in the philosophy of science, we could say that the reason for this is that physics as a science attempts to describe, explain and predict a realm of reality that in its essential operation is completely independent of human needs, desires and interests. Economics, on the other hand, is manifestly concerned with human action. The objects of economics analysis–prices, wages, supply, demand, interest, money, production, and distribution–are all socially constituted objects and exist only in a nexus of human activity. Does that imply that economics ineluctably has a normative element? As we shall see, some people do hold this view.

Is Economics a science?

Is economics a science (where science, materially understood, would be a pattern of generally recurring structures in the flux of reality)? If economics were a science, then it would seem that it should have its own intrinsic order that is independent of ethics. Like all human enterprises, economics may be (accidentally) contaminated by the usual factors of human bias, ignorance, self-interest, and so on, but as a rational investigation, the process is intrinsically self-correcting2.

Two schools of economics hold that economics is a science: the Austro-AristotelianSchool and the Neo-ClassicalSchool. For the Austro-Aristotelians, economics as a science consists, at least in part, in the grasp of essences. For the Neo -Classicists, economics is a science whose method comprises the construction of models and their testing by experiment. Its method is broadly similar to that employed by the so-called ‘hard’ sciences. The difference between the two schools lies in how they regard the subject matter of economics.

As I’ve just indicated, the subject matter of economics is precisely constituted by meaningful acts which have intrinsic intelligibility and which are materially embodied. The subject matter of physics, on the other hand, is not constituted by meaningful acts. It would be a mistake–one that was made by medieval Aristotelians–to use Aristotelian methods here in attempting to develop the science of physics. Might it not be equally mistaken to use the methods of the hard sciences in attempting to develop the science of economics?

Economics and ethics

Some thinkers take a forthright line on the relationship of economics and ethics. Ricardo Crespo, for example, holds unequivocally that economics is a moral science, where moral science is understood in its classical Aristotelian sense. As an Aristotelian-type practical science, economics can be expected to be inexact, concrete, and pragmatic, since it is concerned with praxis, with human action. This claim is not to be understood as the attenuated thesis that morality should have some purchase on what economists do, or economic actors do, but the stronger thesis that ‘the correct epistemological framework for economics is that of a classical practical science’3. Such a claim does not involve the reduction of economics to ethics, rather the denial that economics is value-free. ‘…[E]conomics is a moral science insofar as it is a practical science. While ethics studies the ethical problem in itself, economics studies the economic problem: but this problem cannot be isolated from its ethical aspects. Aristotle distinguished between ethics, which is a science, and the practical sciences, which are ethical insofar as they consider ethical aspects of the analyzed subject. Value-neutrality is an Enlightenment concept that originates in gnosiological and metaphysical agnosticism.’4

Peter Boettke, responding to Crespo, focuses on the issue of value-neutrality. As he puts it, the question is ‘whether knowledge gleaned in the disciplines of economics and political economy can be both value-free and value-neutral’5. Boettke argues for the value-free role of economics as something, which provides ‘the basis for our rational discussion of alternative visions of the good’6. Distinguishing between political economy and economics, Boettke claims, ‘it is only a value-neutral economics that enables economics and social thinkers to practice a value-relevant political economy’7. On his analysis, economics does not concern itself with ends but only with the effectiveness of the relationship of means to ends. ‘The knowledge that economics provides can be separated from ethical questions. Moreover, it is precisely because economics can provide value-neutral knowledge of the logical consequences of different ethical systems that [it] is an essential input to a value-relevant discipline of political economy…. Knowledge of the choice of alternative social arrangements is vital to making the choice among those arrangements. If we deny that this knowledge is obtainable in any manner that allows for interpersonal assessment, then we deny for the moral science of political economy the ability to adjudicate between different conceptions of social organization. On the other hand, if we restrict our analytical attention to the relationship between means and ends, and thus treat ends as given, then we can obtain the necessary critical information that eventually makes value-relevant statements move beyond mere opinions reflecting the political and social preferences of the analyst.8‘

Reflecting on Boettke’s arguments, Crespo adverts to the Aristotelian distinction between the theoretical, the practical and the technical. Practical sciences bear on purposive action and are those moral or value-relevant sciences. The technical sciences, on the other hand, determine the most adequate way of attaining a desired goal or making a product. Taking up and accepting Boettke’s distinction between political economy and economics, Crespo remarks that political science must be a practical science whereas economics must be a technical one. ‘In Aristotle’s schema, oikonomike broadly corresponds to political economy, the practical science, and chrematistics to economics, the technical science.9‘ [See Aristotle, Politics, chs. 3-11.] In the light of this distinction he agrees with Boettke on the value-free character of economics but cautions that ‘[f]or technical theory to be operational, it must have content. A continuous dialectical flow oscillating between practical and technical considerations ought to be followed. That would be the real economic science–one that involves both economics and political economy’10.

Kurt Rothschild would be prepared to maintain the scientific/normative distinction but aware of the complexities involved. The science of economics analyses and explains the economic process but doesn’t necessarily evaluate the process as being either good or bad. Rothschild, however, admits that in practice, it can be difficult for the economists to engage in their studies without raising some ethical questions. ‘The ‘mainstream economics’ of the twentieth century fully accepts [the separation of economics from its ethical roots]…. Economic theory is seen as a positive science which has to analyse and to explain the mechanisms of economic processes…. Important as ethical valuations (‘ought’ statements) may be, they should not form part of the economist’s research programme’11.

L.D. Keita, on the other hand, is sceptical of the pretensions of economics, at least in its neoclassical variety, to scientific status. Given that the whole theoretical structure of economics rests on the postulate of rationality (which for him is through and through normative) he believes that this is enough to make economics, just as such, a normative discipline. ‘… [T]he ontological divide between positive economics and normative economics is a modernist chimera founded on the rigid dogmas of positivism…. [T]he total structure of neoclassical economics is normative in nature on account of the special role it ascribes to the postulate of rationality.12‘ In fact, Keita goes so far as to argue that rather than economics being, as it were, a branch of applied mathematics (as it appears to be in some varieties of Neo-Classical theory), it should better be conceived of as a branch of applied ethics.

To meet Keita’s claim regarding the intrinsic normativity of economics, we must, I think, distinguish between internal or constitutive normativity and external or extrinsic normativity. As I have indicated above, economics is internally normative, and necessarily so, for the data with which it deals is constituted by human action and its manifestations. But that kind of normativity is not enough to settle the question of whether the distinction between a normative and a non-normative economics is viable. It is still an open question whether economics, thus normatively constituted, is denuded of its a-moral technical dimension. I believe that the answer to this question is that it is not. While economics, constitutively or internally normative, is further contextualised within ethics and politics, their particular brands of normativity are external to the technical body of economic theory.

Two extremes are therefore to be avoided. On the one hand, the subsumption of economics completely into praxis would denude it of its technical aspects–economics would then becomes a local and parochial form of politic theory; on the other hand, the subsumption of economics completely into techne decontextualises economics unrealistically from the broader social and political world in which it subsists and without which it has no ultimate meaning13.

III: A Case in Point

To focus the discussion a little more sharply, I should like to consider a case in point. Catholic Social Teaching burst on to the scene with Rerum Novarum in 189114. Of course, the Church has always had something to say on moral matters connected to the world of commerce, notoriously, for example, in connection with usury, but I think it can fairly be said that a systematic vein of social reflection begins with Rerum Novarum and continues to the present. This body of social teaching has the capacity to divide Catholics of various political hues. Some find the teachings on, say, the just wage and the original gift of the world to the whole of mankind, to be a wholly appropriate criticism of the manifold deficiencies of capitalism, while others find such teaching to be economically naive. Others are heartened by the assertion of the right to private property and the ringing condemnation of socialism as a system; others are equally appalled by this. Some applaud one encyclical and disparage another. Murray Rothbard, for example, remarks acidly that ‘Rerum Novarum… is fundamentally libertarian and pro-capitalist. Quadragesimo Anno, on the other hand, is virulently anti-capitalist and, in fact, pro-fascist’15. Others, perhaps more moderately, discern a certain unresolved tension in the Papal pronouncements. Medaille remarks that ‘… when we confront the Papal teachings, we are immediately faced with a conundrum. On the one hand, they command the freedom of the market and, on the other, they command the payment of a living wage. Yet a free market sets its prices, even the price for labor, according to the laws of supply and demand, not according to the law of needs and certainly not according to Papal command’16.

A Hot Debate

A lively dispute on the relationship between Catholic Social Teaching and economics has broken out on the web. Thomas Woods, in his article ‘Catholic Social Teaching and Economic Law’ (2002) remarks that ‘[t]he primary difficulty with much of what has fallen under the heading of Catholic Social teaching since Pope Leo XIII’s Rerum Novarum (1891) is that it assumes without argument that the force of human will suffices to resolve economic questions, and that reason and the conclusions of economic law can be safely neglected, even scorned. In fact… proponents of Catholic social teaching effectively deny the very existence of economic law’17.

Woods pretty much accuses the authors of the encyclicals of a certain kind of economic voluntarism! ‘The clear implication of all this is that will, desire, and good intention suffice to bring about high wages, vacation time, free health care, and the like. Indeed much of Catholic social thought suggests that the problem of economics and wealth is to a significant degree a matter of human manipulation and contrivance rather than a rational and sober reckoning with the constraints and scarcities with which man is naturally confronted.18‘

He notes that Pius XI makes what he calls ‘a significant concession’ to economic reality in Quadragesimo Anno but he doesn’t provide much analysis or commentary on this passage which I consider not just to be a concession but to be extraordinary significant in itself. More on this later.

In at least partial sympathy with Woods, William R. Luckey argues that Catholic Social Teaching has its roots in the German Historical School, which was radically opposed to the view that economics was a science. ‘The intellectual origins of Catholic social teaching on economics are a very clear reflection of the thought of the German historical school… The acceptance of some market ideas by Pope John Paul II does show the irrelevance of the previous economic teaching, but there still remains at least a partial adherence to the denial of economics as a science inherent in the German historical school’s approach, which treats the classical liberal approach as a mere ideology motivated by the economic greed of the capitalists, despite the facts.19‘

Needless to say, Woods’ thesis has come in for a lot of criticism. Russell Sparkes, reviewing Thomas Rourke’s Neo-Conservatism (1997), remarks, ‘the most subtle challenge to [Catholic social teaching] came not from those who attacked it, but rather from those who attempted to reverse its traditional understanding’20. Sparkes attacks the neoconservatives for quoting selectively from Centesimus Annus and regards their interpretation of the encyclical as being unrepresentative of the Church’s teaching. ‘…[T]he neoconservative claims are lacking in a number of ways; they use a ‘fundamentalist’ approach of extracting individual pieces from Catholic encyclicals; they are not well grounded in the economic facts of the real world, and much of their arguments seem based on rhetoric rather than hard analysis.21‘

Todd Whitmore also attacks Catholic neoconservative economics (in the persons of Novak, Neuhaus and Weigel). According to Whitmore, the neo-conservatives hold a dissenting position on ‘economic rights’ given their presence in official documents at a high level of generality. If it is dissent to reject the sexual doctrine taught in the Encyclicals, why, he wonders, should it not also be dissent to reject the social teaching regarding such things as economic rights in those documents?

Scott Richert is another who takes exception to Woods’ thesis. His objection, it seems to me, is extremely pertinent. ‘ [Woods’] use of phrases as ‘economic law, economic science,’ ‘the very nature of economics,’ ‘value-neutral, scientific discipline’… goes straight to the heart of the matter. Catholic social thought does not regard economics as a hard science, like mathematics; at best, it is a science in the sense that Latin and all European language other than English can use the term–knowledge as an object of study. Thus, history can be a science without there being a science of history, in the sense of immutable laws that govern history’22. He notes Woods’ citation of the pertinent paragraphs from Quadragesimo Anno and remarks ‘Pius XI did not concede that ‘economics is a bona fide science’ in the sense of mathematics, as [Woods] implies. Pius does not refer to ‘economic science,’ and his very use of the term moral science… makes it clear that he is writing… within the context of the broader understanding of scientia… The question, then, comes down to the nature of economic science. If [Woods’] assumption is incorrect, and ‘economic laws’ aren’t the equivalent of mathematical laws, then the Church is well within Her authority to instruct Christians to act outside of such ‘laws’–or, indeed, even to act against them’23.

Woods responded in a short paper of 22 June 2004, referring to his forthcoming book. The key point in this paper (and, presumably, the book) is to distinguish between moral and technical matters. Where a policy or procedure is intrinsically immoral, no instrumental considerations come into play. Abortion, for example is intrinsically immoral so its alleged efficiency as a method of population control is irrelevant. But where policies or procedures are morally indifferent then technical considerations come into play in considering which to choose. As Woods puts it, ‘if things work in a certain way, no Church pronouncement can make them work another way’. [p. 3.] Woods is not claiming that the sciences, including economics, are exempt from moral critique, merely exempt from technical critique. In this claim he is, I believe, fundamentally correct.

Both Woods and Richert advert to Quadragesimo Anno, paras. 41 and following. I believe that Richert seriously underestimates the significance of this passage and that even Woods doesn’t exploit its full potential.

41. ‘…[T]here resides in Us the right and duty to pronounce with supreme authority upon social and economic matters [de rebus istis socialibus et oeconomicis]. Certainly the Church was not given the commission to guide men to an only fleeting and perishable happiness [ad fluxam solum et caducam felicitatem dirigendi] but to that which is eternal. Indeed ‘the Church holds that it is unlawful for her to mix without cause in these temporal concerns’ [terrenis hisce negotiis sine ratione se immiscere nefas putat Ecclesia] [in Pius XI’s Ubi Arcano, 1922]; however, she can in no wise renounce the duty God entrusted to her to interpose her authority, not of course in matters of technique [non iis quidem, quae artis sunt] for which she is neither suitably equipped nor endowed by office [ad quae neque mediis aptis est instructa nec officio praedita], but in all things that are connected with the moral law. For as to these, the deposit of truth that God committed to Us and the grave duty of disseminating and interpreting the whole moral law, and of urging it in season and out of season, bring under and subject to Our supreme jurisdiction not only social order but economic activities themselves.

42. Even though economics [oeconomica res] and moral science [moralis disciplina–i.e., not ‘scientia’ as Richert suggests ] employs each its own principles in its own sphere, it is, nevertheless, an error to say that the economic and moral orders are so distinct from and alien to each other that the former depends in no way on the latter. Certainly the laws of economics [oeconomicae… leges], as they are termed, being based on the very nature of material things [ex ipsis rerum naturis] and on the capacities of the human body and mind [et humani corporis animique indole profectae], determine the limits of what productive effort cannot, and of what it can, attain in the economic field and by what means [statuunt quidem quosnam fines hominis efficientia non possit, quosnam possit quibusque adhibitis mediis in campo oeconomico persequi]. Yet it is reason itself that clearly shows, on the basis of the individual and social nature of things and of men, the purpose that God ordained for all economic life.

43. But it is only the moral law which, just as it commands us to seek our supreme and last end in the whole scheme of our activity, so likewise commands us to seek directly in each kind of activity those purposes which we know that nature, or rather God the Author of nature, established for that kind of action, and in orderly relationship to subordinate such immediate purposes to our supreme and last end. If we faithfully observe this law, then it will follow that the particular purposes, both individual and social, that are sought in the economic field will fall in their proper place in the universal order of purposes and we, in ascending through them, as it were by steps, shall attain the final end of all things, that is God, to Himself and to us, the supreme and inexhaustible Good.24‘

Summary of Quadragesimo, paras. 41-43

The Pope has the right and duty to pronounce (a) with supreme authority (b)upon social and ECONOMIC matters, BUT

It is unlawful for the Church to mix without cause in these temporal concerns

Such authoritative pronouncements are not to be made in matters of TECHNIQUE where the Church is (a) neither suitably equipped, nor (b) endowed by office; but in (c) are to be made in all things connected with the moral law, and social and ECONOMIC activities fall under the moral law.

Both economics and moral science have (a) their own principles (b) which operate in their own spheres

However, it is an error to hold that (a) the economic order, and (b) the moral order are so distinct that (a) depends in no way on (b).

The laws of economics [n.b., laws!] are (a) based on the very nature of material things [ontology] and (b) on the capacities of the human body and mind [anthropology/psychology], which together determine (c) the limits of what productive human effort (i) can and cannot attain (ii) and by what means

The divinely ordained purpose of all economic life is given by reason

The moral law (a) commands us to seek our supreme and last end in the whole scheme of our activity, and (b) commands us to seek directly in each kind of activity [including economic activity] those purposes that nature (or rather God, the author of nature) established for that activity, and (c) commands us to subordinate (b) to (a) in an orderly way.

Conclusion

I realise that I could be accused of selective citation in that the passage I have been analysing above is only one section from one Encyclical, but it contains, I believe, in principles 4, 6, 5 & 8 above, the kernel of the correct account of the relation between ethics and economics, one that broadly agrees with the account given by Woods and by me. While situating all human activity within the scope of morality (how could it be placed otherwise?), Pius XI recognises that economics has its own principles and laws that operate in their own sphere. In technical matters the Church (and, by extension, any moral theory) has nothing to say to economics. Which matters, precisely, are technical, and what precisely the laws of economics are–these questions, of course, are not easily answered and different views can and will be taken. But the principled point has, I believe, been conceded that whatever be the scope of the technical economics, and whatever be its laws, they cannot just as such be constrained by ethics.

Select Bibliography

Alvey, James E. ‘A Short History of Economics as a Moral Science.’ Journal of Markets & Morality, Vol. 2 No 1 (1999), pp. 53-73.

Crespo, p. 221. Ricardo came down on the technical side. ‘It is not the province of the Political Economist to advise: he is to tell you how to become rich, but he is not to advise you to prefer riches to indolence, or indolence to riches.’ David Ricardo, The Works and Correspondence of David Ricardo, 11 vols., ed. Pierro Sraffa and M. H. Dodd (Cambridge, 1951-73), vol. 2, p. 338. ↩

It would seem that it was concern such as this about the functional detachment of economics as a technical science from economics as a moral science that motivated Amitai Etzione to develop, in his 1988 book The Moral Dimension, an economic theory based on deontological principles. His point appears to be that human actors are not free standing individuals but are embedded in social groups constituted by a culture and history and that ‘markets should not be treated as free-standing and self-regulating, but as encapsulated by normative and political systems’. ↩

The Social Teaching of the Church is to be found primarily in the encyclicals Rerum Novarum [1891., Quadragesimo Anno [1931., Mater et Magistra [1961., Pacem in Terris [1963., Populorum Progressio [1967., Laborem Exercens [1981., Sollicitudo rei socialis [1987.,Centesimus Annus [1991., in Gaudium et Spes, [documents of Vatican II. and in the Catechism of the Catholic Church [1993. paras. 2401-2448. ↩